An Incurred Cost Proposal (ICP) is a report of your actual indirect expenses that you are required to submit annually when you have a Cost Reimbursable contract. You should file no later than six months after the end of the fiscal year during which you completed this contract. If your fiscal year ends on December 31st, that would mean your incurred cost report is due on June 30th of the following year.
It is important to report incurred costs accurately and to file on time or a unilateral decision will be made regarding reimbursement. There are detailed guidelines you should follow when filing your submissions. You can read the full guidelines here. Take a look at these main points to get a better idea of the content of the guidelines:
- Start by putting together any document that is relevant to the project. You will have to include a chart that shows the organization of your company, any financial statement with information related to the project, statements of costs (one for direct costs and one for indirect costs) and worksheets for personnel cost and fringe benefits. You will also need documentation relevant to other government contracts you worked on in the past.
- The DCAA representative who will receive your submissions need to fully understand the nature of the work you did. You need to document everything by submitting detailed invoices from subcontractors, suppliers or consultants and details of the agreement you have with other organizations or individuals who helped you complete this project.
- You will also need to document all the work you did, including the number of hours spent on the project and any expenses linked to traveling or meeting with business partners.
- Your direct and indirect expenses need to be properly categorized. There are sixteen different schedules you can use to report costs and it is important to report each expense on the right schedule or it might not be recognized as an incurred cost. You will have to reconcile your accounts and claimed direct costs as well as your payroll on these schedules.
- Report your indirect costs on Schedule A, B, C and D, your indirect costs on Schedules G, H and N, use Schedules K and L for your payroll and J for costs linked to subcontracting.
Don’t forget to download this helpful checklist to make sure you have filed all these schedules correctly.
It can take up to two years for your incurred costs submissions to be audited and approved. It is crucial to submit accurate information since providing additional details might be difficult if the DCMA or DCAA contacts you years after you completed the contract. Properly filing your submissions is a lot easier if you use accounting software that is tailored to the unique needs of government contractors. Learn more about the solutions we offer to contractors in your field.
